Tier 2 Capital

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Tier 2 Capital

Capital in a bank that is difficult to calculate or liquidate, especially as compared to Tier 1 capital. Under the Basel I Accord, tier 2 capital includes revaluation reserves (or the increase in the value in an asset after it is reappraised), general provisions (or money that the bank has lost but has been unable to calculate), and subordinated debt (or debt that, in the event of default, receives payment only after some other debt). Tier 2 capital is included in calculations of a bank's reserve requirements but is not considered as reliable as Tier 1 capital.
References in periodicals archive ?
It was supported in both 2015 and 2016 through the issue of subordinated bonds, which qualify as tier two capital, as well as retained earnings, although the payout ratio is high.
To boost foreign currency reserves in the nation, the central bank has requested that commercial banks use their surplus funds to be included in their Tier Two Capital.
Summary: In a move to boost foreign currency reserves, the Central Bank requested that commercial banks use their surplus funds, which they generate by selling local-currency Treasury bonds from their portfolio and buying eurobonds simultaneously, as provisions in Lebanese pounds to be included in their Tier Two Capital.
Shareholders of Sterling Bank Plc have sanctioned the bank s proposal to raise Tier One capital of N20 billion through private placements and extra Tier Two capital of N31.
The contribution is comprised of tier one and tier two capital.
Capital requirement The loan will support the bank's tier two capital requirement and is subject to legal and regulatory approvals, the banks said in a disclosure statement posted on MSM website.
Sri Lankan banks based on the tier one capital can successfully engage the Qatari banks to attract tier two capital," the central bank governor said.
But most banks now set internal targets slightly north of 15% - thus 15%, 16%, 17% - so whenever their capital gets close to that level it is a trigger to raise tier one or tier two capital.
The measure of solvency for a bank is done by the ratio of tier one and tier two capital.
He also represents clients in debt capital markets transactions, which in recent years have included tier two capital notes for bank issuers, extendible liquidity notes, commercial paper, and medium-term notes.
These include increasing tier two capital, selling investment and recovery properties, and recovering bad debts.
It was designed in the wake of the global financial crisis to invest in Tier One and Tier Two capital in emerging market commercial banks that are systemically important for their local economies.